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Monthly Average Price
The monthly average price is the arithmetic average of daily prices over a calendar month. It is widely used in oil contracts for pricing stability.
This mechanism smooths daily volatility and reduces sensitivity to short-term market fluctuations. It is common in physical supply and long-term swap agreements.
Monthly averaging can benefit both buyers and sellers, depending on price trends. Traders must consider timing effects carefully.
The approach emphasizes longer-term fundamentals over intraday market noise.